Outsourcing benefits IT budgets

As information technology salaries continue to skyrocket, the bidding war to hire and retain top computing talent remains in full swing. IT staff outsourcing serves as a practical, cost-effective hiring alternative for budget-conscious CIOs who are struggling to complete Y2K-related projects and keep up with new developments in information technology.

According to a 1998 salary survey conducted by the System Administration, Networking and Security Institute, a Bethesda, Md.-based educational organization, the average raise for IT professionals was 11.9 percent last year. More than 7,100 public- and private-sector IT professionals participated. The median salary was $60,991, and more than 75 percent of respondents indicated a salary between $40,000 and $90,000.

While contract staff are used primarily to provide support for permanent IT staff at large organizations, they also serve as an effective remedy to the salary concerns at small to midsize organizations. In addition to relieving human resources departments of the burden of recruiting, screening and evaluating IT talent, using contract employees eliminates the paperwork and costs associated with health and disability coverage and other benefits extended to full-time staff.

“Our primary goal in outsourcing IT staff has typically been [getting people to] handle certain tasks that require an unusually quick response or [gaining] extra resources for short periods of time,” says Haldis Toppel, information systems manager for Los Angeles. “As a publicly funded institution, we’re not in a position where we can hire and dismiss staff easily for short-term projects.”

According to Toppel, the meteoric rise in salaries in recent years also has presented a problem regarding permanent hires. She says that the city’s salary scale does not always meet the requirements of IT professionals surfing the market for the best offers. “Our problems were exacerbated by a recent two-year hiring freeze,” she says. “We weren’t able to continue building our staff from the bottom up, and we’re currently looking at a big void in staff development. It’s really unfortunate because experienced and accomplished people are necessary to most of our projects.

“Because of the hiring freeze, we’ve basically split up our experienced staff and ‘backfilled’ positions with contract programmers rather than filling them with permanent staff,” she adds. “[Most] contract programmers on our staff right now are working on Y2K compliance.”

Outsourcing fills immediate needs but also eliminates much of the difficulty of employee-employer compatibility, which can often be difficult to assess until an employee has worked several months. Many organizations also offer lease-to-hire programs that make it possible to permanently retain contracted employees who prove to be a good fit.

One of the drawbacks of outsourcing work to employees who take the “highest bidder” approach is that it can affect an organization’s bottom line. Instead of hiring people who are focused on long-term growth, building their skills and gathering experience, agencies end up with people who are more focused on money. Employers in turn will expect more from their contracted employees in terms of commitments, hours and productivity.

Despite the drawbacks of outsourcing, Toppel does not hesitate to label IT staff outsourcing as cost-effective. With the constraints placed on her department over the last few years, she says it could not have achieved the business goals of the city with the same level of results without contract staffing.